Former Allies Now Frenemies, Cisco and EMC Chart Similar Course To Maintain Dominance

Commodification promised to kill old tech stalwarts like Cisco, EMC and Oracle as standardized, mass produced hardware paired with open source software undermined their high-margin businesses. However the road to irrelevance was detoured by an instinctive response: adapt or die. Each company’s resulting metamorphosis from peddling boxes to building full stack IT systems has been both predictable and impressive. Predictable in that the old tech response to ankle biting commodity products follows the classic Clayton Christensen disruptive technology playbook: move up the performance and feature axis. But today’s old tech response deviates from the economic model by introducing a third axis: services. Cisco and EMC realize that they can’t win the price/performance game. Instead, each has concluded that businesses, even tech savvy firms, don’t obsess over about speeds and feeds, but business outcomes and competitive advantage. Old tech vendors can’t win a price war, but they can win a results war. As my column explains, juxtaposing recent statements by executives at Cisco and EMC shows the common conclusion each has reached to avoid marginalization in an era of cheap hardware and free software.

As IT bluebloods like Cisco, EMC, Dell, HP and Oracle have morphed from product segment leaders into full stack IT providers it’s turned former allies into adversaries. Companies that once saw collaborative opportunities by combining strengths in different product silos to deliver complete IT packages have gradually expanded into each other’s turf, each trying to be the one-stop IT shop. Although colliding worlds among IT vendors has turned collaboration into competition, the big firms still have much in common. Indeed, Cisco and EMC, former allies now frenemies, face a common threat from commodity hardware and open source software. Juxtaposing recent comments by their respective executives makes clear they are responding to comparable threats with similar strategies. Firms that grew by selling products with demonstrably superior performance now stress broad portfolios they’ve stitched into end-to-end technology platforms. According to Cisco’s legendary CEO John Chambers customers want “outcomes.”

Source: Cisco

As I explain in the full column, both companies are taking an Apple-like approach to enterprise IT by emphasizing higher-margin packaged “solutions” of pre-integrated hardware and software bundles that just work that appeals to beleaguered IT departments that don’t have the time or expertise to learn, test and integrate white-box hardware and open source software.

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